Preauthorized electronic debits
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Preauthorized electronic debits (PAD)
Debits to a bank account in advance by the payer. The payer's bank sends payment to the payee's bank through the Automated Clearing House (ACH) system.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
Preauthorized Electronic Debit
A situation in which an account holder at a bank allows deductions from his/her account without explicit authorization. That is, an account holder may give a creditor authorization to take payment out of his/her bank account on a certain date or series of dates. Preauthorized electronic debits are most common and perhaps most useful for standing payments that do not fluctuate, such as loan or mortgage payments. They are known informally as electronic checks.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved